Megaupload Wins Fight in New Zealand Court to Pay Its Bills

New Zealand's High Court ruled on Wednesday that Megaupload can take out a NZ$6 million (US4.8 million) loan to pay its legal bills and rent for founder Kim Dotcom.

The advance will be secured against $10 million in New Zealand government bonds held by Dotcom but which have been frozen since April by a court order, according to the ruling by Justice Judith Potter.

The flamboyant Dotcom posted the outcome on his Twitter feed, later writing "Let's get together, let's all unite, or they will do whatever they like."

One of Dotcom's lawyers, William Akel, said Wednesday evening by telephone the ruling is "a good step."

Funds belonging to Megaupload, Dotcom and other co-defendants have been frozen since the file-sharing site was shut down in January. The U.S. is seeking to extradite Dotcom on criminal copyright infringement charges, alleging he and others encouraged the site's users to infringe copyright, causing more than $175 million in damages. Extradition proceedings are expected to begin in March.

Megaupload had asked for nearly $8.5 million to be released, which included close to $2.7 million for legal fees to date and up to $2.5 million for future legal fees, as well as $2 million to cover past and future rent for his mansion outside of Auckland. Rent on the mansion is $1 million a year, according to a copy of the ruling obtained by Wired.com.

According to the ruling, Dotcom secured a $250,000 loan to cover a quarterly installment of the rent that was due in February. In May, his landlord agree to a three-month delay in paying rent if the balance was paid in one lump sum.

Potter denied Dotcom $300,000 to pay the Rothken Law Firm, which had represented Megaupload. The request had been opposed by Crown Law, which represents the New Zealand government and U.S. prosecutors' interests, on the basis that there was no need for representatives of the firm to travel to New Zealand.

Dotcom will also be allowed to sell nine vehicles: five Mercedes, a Rolls Royce Coupe, two Mini Coopers and a Toyota Hilux.

The next Megaupload hearing in New Zealand will deal with a June 28 ruling that the search warrants used to seize Dotcom's property were overly broad and invalid. Crown Law is appealing the ruling on behalf of the U.S., and a hearing is scheduled near the end of next month, Akel said.